[Senate Hearing 113-124]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 113-124

                  NOMINATION OF DANIEL M. TANGHERLINI

=======================================================================

                                HEARING

                               before the

                              COMMITTEE ON
               HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
                          UNITED STATES SENATE

                    ONE HUNDRED THIRTEENTH CONGRESS


                             FIRST SESSION

                               __________

 NOMINATION OF DANIEL M. TANGHERLINI, TO BE ADMINISTRATOR U.S. GENERAL 
                        SERVICES ADMINISTRATION

                               __________

                             JUNE 18, 2013

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        COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS

                  THOMAS R. CARPER, Delaware Chairman
CARL LEVIN, Michigan                 TOM COBURN, Oklahoma
MARK L. PRYOR, Arkansas              JOHN McCAIN, Arizona
MARY L. LANDRIEU, Louisiana          RON JOHNSON, Wisconsin
CLAIRE McCASKILL, Missouri           ROB PORTMAN, Ohio
JON TESTER, Montana                  RAND PAUL, Kentucky
MARK BEGICH, Alaska                  MICHAEL B. ENZI, Wyoming
TAMMY BALDWIN, Wisconsin             KELLY AYOTTE, New Hampshire
HEIDI HEITKAMP, North Dakota

                   Richard J. Kessler, Staff Director
               John P. Kilvington, Deputy Staff Director
         Troy H. Cribb, Chief Counsel for Governmental Affairs
            Deirdre G. Armstrong, Professional Staff Member
               Keith B. Ashdown, Minority Staff Director
         Christopher J. Barkley, Minority Deputy Staff Director
                  Sara Beth Groshart, Minority Counsel
                     Trina D. Shiffman, Chief Clerk
                    Laura W. Kilbride, Hearing Clerk














                            C O N T E N T S

                                 ------                                
Opening statements:
                                                                   Page
    Senator Carper...............................................     1
    Senator Coburn...............................................     3
    Senator Ayotte...............................................    10
    Senator McCaskill............................................    14
Prepared statements:
    Senator Carper...............................................    27
    Senator Coburn...............................................    30

                               WITNESSES
                         Tuesday, June 18, 2013

Daniel M. Tangherlini, to be Administrator, U.S. General Services 
  Administration
    Testimony....................................................     5
    Prepared statement...........................................    32
    Biographical and financial information.......................    36
    Letter from the Office of Government Ethics..................    55
    Responses to pre-hearing questions...........................    58
    Responses to post-hearing questions..........................    94
Prepared Statement of Paul Strauss, U.S. Shadow Senator, District 
  of Columbia....................................................   112

 
                  NOMINATION OF DANIEL M. TANGHERLINI,
       TO BE ADMINISTRATOR, U.S. GENERAL SERVICES ADMINISTRATION

                              ----------                              


                             JUNE 18, 2013

                                     U.S. Senate,  
                           Committee on Homeland Security  
                                  and Governmental Affairs,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 10:33 a.m., in 
room SD-342, Dirksen Senate Office Building, Hon. Thomas R. 
Carper, Chairman of the Committee, presiding.
    Present: Senators Carper, McCaskill, Heitkamp, Coburn, and 
Ayotte.

              OPENING STATEMENT OF CHAIRMAN CARPER

    Chairman Carper. The hearing will come to order. Daniel, 
welcome to you and your family and our other guests. We are 
happy that you are willing to assume these responsibilities if 
confirmed.
    For decades, it has been said that there are two letters, a 
couple of Chinese words, one for danger and one for 
opportunity. I am told that the symbol for those is pretty much 
the same. Some metrics on the Chinese language, I would point 
out that this is an overly simplistic interpretation of the 
word, but I think that out of popularity, the axiom that crisis 
brings opportunity persists because there is a large dose of 
truth. I oftentimes quote Albert Einstein who says, in 
adversity lies opportunity. I do not know if it was Chinese, 
but you get the drift.
    Last spring a crisis unfolded at the General Services 
Administration (GSA) when a report of GSA Inspector General 
(IG) detailed a reckless, wasteful, and in some instances, 
illegal spending of some employees of GSA's Public Building 
Service at a lavish conference. These employees used public 
resources to reward themselves with catered parties, team-
building exercises that involved building bicycles, and 
conference souvenirs.
    Unfortunately, this particular conference was not an 
isolated instance of bad judgment. In looking into GSA's 
spending practices, Congress learned of other wasteful 
spending, extravagant travel, misuse of government charge 
cards, questionable employee awards programs, and another 
conference where taxpayers paid for GSA employees to beat on 
drums. These are just a few examples.
    These scandals all shook the trust of Congress in GSA--the 
agency whose primary purpose is to make our Federal Government 
more efficient and more frugal in spending taxpayer dollars.
    Taking over as the Acting Director of GSA last April, Dan 
Tangherlini understood that this moment of crisis afforded an 
opportunity to make GSA a better agency. And to his credit, he 
did not approach the job with a view to do the minimal amount 
necessary to sweep the scandal under the rug. Rather, he 
undertook what he called a top-to-bottom review of the whole 
agency.
    Mr. Tangherlini has put in stronger controls over spending 
within GSA. He has consolidated activities related to financial 
management, human resources, information technology (IT), 
acquisition, and other administrative functions. These changes 
should make GSA a leaner agency that is better focused on its 
core functions of helping other agencies make smarter choices 
in managing their property in acquiring goods and services.
    Longstanding challenges with both of these areas, property 
management and procurement, combined with the current fiscal 
crisis, increase the urgency of making sure that GSA is a go-to 
place for agencies to be able to do more with less. GSA can and 
should be at the center of our government's efforts to resolve 
our major management challenges.
    The management of real property has been on the Government 
Accountability Office's (GAOs) high-risk list of troubled 
problems for about a decade. Our government has tens of 
thousands of properties that are either no longer needed or 
only partially used. But we also lack accurate, comprehensive 
data that would enable better decisions about how agencies use 
their property. Our government also relies too much on costly 
leases, when the cheaper option over the long run would be to 
own the property. Additionally, the Federal Government has a 
backlog of a billions of dollars in needed repairs and 
maintenance which, if unaddressed, will increase the cost of 
maintaining the property in the long run.
    In the area of acquisition, GSA plays an important role 
with about 10 percent, roughly $50 billion--of total Federal 
spending flowing through GSA's contracts and other services. 
But there is much room for improvement. For example, GAO has 
done several studies showing that there is enormous potential 
for the government to save billions of dollars each year 
through strategically sourcing commonly used goods and services 
through governmentwide contracts that fully leverage the buying 
power of the Federal Government, much like large companies do 
for themselves.
    GSA deserves a leader who understands the complexity of 
these management challenges and who could work well with the 
heads of other agencies to help them meet their needs, and I 
think they will have such a leader now in Dan Tangherlini, if 
he is confirmed by the Senate.
    Mr. Tangherlini's service as Acting Administrator of GSA, 
in and of itself, shows he is the logical choice to be 
confirmed as Administrator, but he also brings a wealth of 
other experience in public sector administration. He served, as 
you may know, for 6 years at the Office of Management and 
Budget (OMB) early in his career, has a strong understanding of 
the budget process, as well as program planning and financial 
management. He then served a year in the Policy Office of the 
U.S. Department of Transportation (DOT). He went on to a string 
of impressive jobs at the local level: Chief Financial Officer 
of the District of Columbia Metropolitan Police Department, 
Interim General Manager of the Washington Metropolitan Area 
Transit Authority, Director of the District of Columbia's 
Department of Transportation, and finally, City Administrator 
and Deputy Mayor of the District of Columbia.
    In 2009, President Obama nominated and the Senate 
confirmed, Mr. Tangherlini as the Assistant Secretary for 
Management at the Treasury Department, where he served until he 
was named Acting Administrator of GSA.
    Mr. Tangherlini's confirmation will also bring badly needed 
stability to the helm of GSA. As my colleagues know, I am a 
firm believer in the power of leadership. Leadership is an 
important and often undervalued asset that can determine 
whether or not an organization of any size or scale can 
effectively accomplish its mission. Leadership is particularly 
important to turning around struggling organizations and 
steering through a crisis.
    One of GSA's main problems over the last decade has been a 
lack of stable leadership, which is, unfortunately, a problem 
throughout the Executive Branch. GSA has had eight different 
leaders over the last 8 years, all but two of them in an acting 
capacity. The last two confirmed leaders of GSA, unfortunately, 
each resigned following scandals.
    Mr. Tangherlini has a well-deserved reputation of being 
someone who knows how to get a job done and who never stops 
looking for ways to do the job better, and that is exactly what 
we need at GSA. I look forward to your testimony. I have read 
it. Look forward to hearing it today, the opportunity to 
discuss with you and all of us your priorities for GSA.
    Thank you for your willingness to do this, and to your 
family, especially your wife, your children. Thank you for your 
willingness to share your husband and your father. And to your 
dad, who is sitting out there, a spry man of 89. He just told 
us, Dr. Coburn and I, he ran the Rock-and-Roll Marathon at the 
age of 89. Whatever you are eating and drinking, we want to 
have some of it, so great to see you.
    Dr. Coburn.

              OPENING STATEMENT OF SENATOR COBURN

    Senator Coburn. Well, welcome. I am going to put my 
statement in the record. Enjoyed our visit in my office. Eight 
years ago next month, Tom Carper and I had a hearing on GSA and 
I would tell you nothing has essentially happened in 8 years. 
We had a frank discussion in my office about the problems. I 
believe you have the capability to actually turn this around. 
And I am going to have a lot of questions for the record. I am 
not going to be able to stay through the full hearing.
    But one of the things is the recent IG report, which has to 
be the most demoralizing thing for your contracting officers. 
Where we have contracting officers doing the right thing and 
their management, through complaints of the well-connected, 
override good decisions, and the result of that is undermining 
the capability of the very people we depend on to make your 
agency viable and effective.
    So I know you were not pleased with that report. I guess 
the thing that I would ask for Senator Carper and myself is for 
you to have good communications on your progress as you try to 
turn this around, how you are solving the problems. I do not 
want you to have to come up here all the time and give us a 
report. But we can make that happen if, in fact, we do not get 
great communication.
    So I hope you would view us as a partner in enabling you to 
carry out what you need to do to make sure--the Federal 
Government is the largest buyer of everything in the world and 
there should not be one instance that we do not get the best 
price and the best value for everything that we do, whether it 
is buildings, whether it is pencils and erasers, whether it is 
computers, whether it is stuff. I do not care what it is. There 
should not be one thing. And that ought to be GSA's goal.
    I would just tell you, when we look at sequester, the 
gentleman sitting before us today could save us a third of that 
every year if GSA was highly effective. And so, some of the 
pains being experienced by other Federal employees today would 
not necessarily have to be there if we had really made some 
progress from 8 years ago when we sat in this Committee and 
went through all the problems at GSA.
    And unfortunately, they are still there. And what that 
means, as Senator Carper alluded to the fact that the average 
length of tenure is less than 2 years for confirmed managers of 
GSA. Leadership really makes a difference. I think you have the 
qualities, the background, the history, and the experience to 
do that, and my hope is that you will take the charge, not just 
to run the GSA, but be responsible for us, with us, in terms of 
eliminating the excesses, the waste, and the poor pricing that 
we get on so many things.
    So I thank you for being here. I welcome your family. These 
are family commitments. This job is going to own Dan for a long 
time, hopefully, and so, what that means is you all will make a 
sacrifice as he does the very important work that he is called 
on to do. So I welcome you. I am going to vote for your 
confirmation. Hopefully, we do not have to have a vote. 
Hopefully, we can unanimous consent (UC) it and we can get you 
in there with the full power of being not the Acting Director, 
but the Director. Thank you for being here.
    Chairman Carper. Thank you, Dr. Coburn. I am going to just 
do a brief introduction of Dan and then we will ask him 
questions, ask him to give any oaths and let him go at it. Dan 
Tangherlini has filed responses to a biographical and financial 
questionnaire. He has answered pre-hearing questions submitted 
by the Committee, and had his financial statements reviewed by 
the Office of Government Ethics. Without objection, this 
information will be made part of the hearing record with the 
exception of the financial data which are on file, available 
for public inspection, in the Committee office.
    The Committee rules require that all witnesses at 
confirmation hearings give their testimony under oath. Mr. 
Tangherlini, I am going to ask you to stand and raise your 
right hand.
    Do you swear that the testimony you are about to give the 
Committee will be the truth, the whole truth, and nothing but 
the truth, so help you, God?
    Mr. Tangherlini. I do.
    Chairman Carper. Please be seated. You are welcome to 
proceed with your statement. Feel free to introduce your 
family, others in the audience that you would like to, and 
again, we are delighted that you are all here. Thank you.

 TESTIMONY OF HON. DANIEL M. TANGHERLINI, TO BE ADMINISTRATOR, 
              U.S. GENERAL SERVICES ADMINISTRATION

    Mr. Tangherlini. Thank you very much. Good morning, 
Chairman Carper, Dr. Coburn, and Members and staff of the 
Committee. I want to thank you for inviting me to appear before 
you today. I am honored to have been asked by the President to 
serve as the Administrator of the U.S. General Services 
Administration.
    I am pleased to be joined here today by my wife, Theresa, a 
pediatric nurse practitioner; my oldest daughter, Cassandra, a 
hard-working student; my parents-in-law, Angelo and Connie 
Picillo; and my father, Frank, my inspiration for public 
service, a veteran of the Second World War who served in the 
101st Airborne at the Battle of the Bulge.
    All of the challenges that we face as a Nation and, I hope, 
should I be confirmed, to face as a leader of GSA, pale in 
comparison to what my father and his generation faced when they 
defended the world against hatred and tyranny. He challenged me 
and my brothers to volunteer, to serve, and to work every day 
to leave the world a better place than the one we were given. 
Thanks, Dad.
    My younger daughter, Francesca, is unable to be here today 
because she is with a friend and her family in Disney World. My 
mother, Jane Kjems, a small business owner, also could not 
attend today.
    Just over one year ago, President Obama appointed me as the 
Acting Administrator of GSA during a very challenging time for 
the agency. From my first day at the office, I have worked with 
the women and men of GSA to restore the trust of the American 
people and to ensure that the agency provides them and the 
government with the best value in real estate, acquisition, and 
technology services.
    I am very proud of what we have been able to accomplish at 
GSA over the past year. Since April 2012, we have worked 
closely with our Inspector General, Brian Miller, to ensure 
that our entire agency is living up to the highest standards of 
public service.
    To that end, GSA has engaged in a comprehensive, top-to-
bottom review of the agency, gathering input from individuals 
at every level of the organization, as well as from our 
partners in the Federal Government and the private sector. This 
process has helped us cultivate a culture of continuous 
evaluation and improvement throughout GSA.
    More importantly, this has led to concrete results, 
transforming GSA into an improved organization, one that offers 
common sense, business-like solutions to our Federal partners. 
During the past Fiscal Year, we reduced our spending on travel, 
IT devices and printing, to end the year 43 percent lower than 
our Fiscal Year 2010 baseline for those items.
    In travel alone, we saved $28 million by revising our 
internal travel and conference policies. Last year, we reduced 
bonuses throughout GSA by 64 percent, including the elimination 
of all bonuses within the Administrator's office. This change 
was accompanied by a targeted hiring freeze designed to ensure 
that any new hires were aligned with the outcomes of our 
ongoing review.
    In addition, we created more than $5 million in savings as 
a result of implementing suggestions offered by GSA employees 
during our Great Ideas Hunt. We have also begun the process of 
consolidating key administrative service functions to eliminate 
unnecessary redundancy and better align internal operations. We 
expect this effort not only to help us become a more efficient 
and effective agency, but also to save $200 million over the 
next 10 years.
    I am proud of the work that we have done together since 
April 2012, and I am excited at the prospect of helping to 
shape GSA's future. Everyone at GSA is working to ensure that 
we provide even more savings to our partner agencies. I believe 
that one of our most critical strategies in this effort is the 
expansion of our market share of Federal spending. By assuming 
more of the government's acquisition market share, we will not 
increase savings, but enable better, more consistent management 
of our resources.
    Simultaneously, we are developing common sense solutions to 
help agencies across the government shrink the Federal 
footprint and find ways to dispose of unneeded or unused 
Federal properties, which can, in turn, contribute to local 
economies. We are working with the real estate industry through 
public-private partnerships to explore the possibility of 
exchanging outdated Federal properties for the construction of 
new facilities that meet the needs of these agencies today.
    GSA is also developing new, more efficient ways to utilize 
Federal office space. Our own historic headquarters is a test 
bed for this approach. We are transforming what was traditional 
office space into a collaborative, flexible work environment 
designed to facilitate cooperation, mobility, and improve 
productivity. Those changes will make it possible for us to 
eliminate more than $24 million in annual lease payments.
    We are hoping to take the lessons we have learned from the 
transformation of our workplace and make them available to the 
entire Federal Government. At the same time, President Obama's 
Fiscal Year 2014 Budget will enable us to make a significant 
investment in America's Federal building infrastructure. This 
budget restores GSA's authority to fully use incoming rent 
funds to make a significant $1.3 billion reinvestment in the 
repair and maintenance of GSA's inventory.
    All of us at GSA understand that every taxpayer dollar 
counts and that its stewardship is our most significant 
responsibility. We know that by providing services that offer 
both savings and results we help agencies focus on their own 
important missions. That is why we are evaluating and re-
evaluating our internal processes and making necessary changes 
to ensure measurable outcomes.
    I am honored to have served with this agency over the last 
14 months, and with your approval, I hope to have the 
opportunity to continue working with the women and men of GSA 
to accomplish our important mission. Thank you very much.
    Chairman Carper. Thanks for that. Let me just say, Dr. 
Coburn has another engagement. Do you want to just take a 
minute and just ask a question or two?
    Senator Coburn. No. I actually have a very well-thought out 
list of questions that I am going to give Dan the time to think 
about and answer. And then I will visit with him by phone 
afterwards.
    Mr. Tangherlini. Great, thank you.
    Chairman Carper. Thank you. One of the first things I 
remember doing with a newly elected Senator, Tom Coburn, was 
actually going out to Chicago and visiting an old Postal 
building which had been vacant for years, and talking about 
that building and other buildings like that around the country. 
That building was owned by, I guess, the Federal Government, by 
the Postal Service. But as you know, we have a lot of 
buildings--I alluded to them in my statement--that are 
underutilized and, in some cases, not utilized.
    But he and I have worked on this for over a half-a-dozen 
years, and I think the Administration has tried in recent years 
to do something about it, with some success, but we still have, 
as you know, too many properties that we are not utilizing or 
we do not need. We maintain, we provide utilities, we provide 
security. It is just foolhardy.
    One of my great frustrations in the 12 years I have been 
here is our inability to develop a comprehensive approach to 
dealing with this issue. The Administration suggested that we 
create a Base Closure and Realignment Commission (BRAC)-like 
process to identify buildings and they would send us a list and 
if we did not vote them down, then those would be closed or 
auctioned off or sold.
    We have worked to change the current process, and now as 
you know, now when Federal properties are unutilized, 
underutilized, they need to be made available, under law and 
the McKinney-Vento Act, they need to be made available to 
homeless groups. And if you will look at the number of 
properties over the last 20 years that ended up being turned 
over to homeless groups, it is a meager list and it grows more 
meager by the year. I think maybe in the last year there was 
one property.
    What we suggested or what some of us put together in the 
legislation--I think it was Dr. Coburn's part of it, I think, 
Senator Portman and myself--was an approach that said, why do 
we not, rather than just turning over these properties to the 
homeless groups, why do we not allow them to be sold and some 
percentage of the sales, the money from the sales proceeds, 
would be turned over to the homeless groups? And the homeless 
groups were afraid if that happened, then their appropriations 
would be cut back dollar-for-dollar for the allocation that 
would come out of the sales proceeds. But we are just not 
getting where we need to go.
    The other problem, maybe just as big a problem, is we have 
the incentives from this line with respect to agencies either 
leasing space or buying space. We had a great example presented 
the other day, I think from the Nuclear Regulatory Commission 
(NRC), for whom a new building was built, large building was 
built, making three buildings.
    And the idea was we are going to build all these new 
nuclear power plants, we are going to build like dozens of new 
nuclear power plants, and the hundred or so that we have, a 
bunch of them are coming up for license renewal, so there is a 
lot going on at the NRC and they needed space for that.
    Now we find out that we are not going to have dozens of new 
nuclear power plants, not anytime soon. We are going to have 
four under construction right now, but the level of activity is 
down, the need for the NRC staff is down, and how do we meet 
the need? But I remember looking at the cost per square foot 
for the new building and a couple of the existing buildings.
    Of the buildings that were listed, the one that was the 
cheapest was the one they owned. It was like half price in 
terms of the overall cost, the life cycle cost for the NRC. So 
these are two. I just want to lay this on the table. Let us 
have a good discussion. This is going to be my only question in 
the first round here. But just think out loud for us.
    What can we do together with the Administration, with GSA, 
working with GAO, others, what can we do?
    Mr. Tangherlini. I appreciate the question, Chairman 
Carper. We have had----
    Chairman Carper. Before you do that.
    Mr. Tangherlini. Oh, I am very sorry.
    Chairman Carper. I am supposed to ask you three standard 
questions.
    Mr. Tangherlini. Oh, yes, sir.
    Chairman Carper. These are like easy questions, like a 
warm-up.
    Mr. Tangherlini. OK.
    Chairman Carper. So I will go ahead and ask those. You have 
heard these questions before. Is there anything you are aware 
of in your background that might present a conflict of interest 
with the duties of the office to which you have been nominated?
    Mr. Tangherlini. No, sir, I am not.
    Chairman Carper. OK. Do you know of anything, personal or 
otherwise, that would in any way prevent you from fully and 
honorable discharging the responsibility of the office to which 
you have been nominated?
    Mr. Tangherlini. No, I do not.
    Chairman Carper. OK. Do you agree, without reservation, to 
respond to any reasonable summons to appear and testify before 
any duly constituted committee of Congress, if you are 
confirmed?
    Mr. Tangherlini. Yes, I do.
    Chairman Carper. Good, thank you. All right.
    Mr. Tangherlini. Thank you.
    Chairman Carper. The easy one is out of the way.
    Mr. Tangherlini. Now the hard one.
    Chairman Carper. Yes, please.
    Mr. Tangherlini. I appreciate your continued interest in 
the subject. We have had a number of conversations, even 
including with Secretary Donovan from the Department of Housing 
and Urban Development (HUD), as well as important policy 
officials from OMB. And as I have said before on this issue, I 
think the three ingredients you need to cook anything up in 
Washington are there. You have a proposal from the 
Administration, you have a version of a bill from the House, 
and you have your own version of a bill here in the Senate.
    So the question is, can we work together going forward to 
coalesce around some basic principles. I think we all share the 
view that we need to more efficiently and effectively use these 
Federal assets. We need to not only ensure that we are fully 
utilizing the assets we have under our control, but that we are 
realizing the most value from them and disposing of them 
quickly when we do not need them anymore.
    The disposal process is complicated, in part, because you 
want to make sure, before you get rid of an asset and you lose 
it forever, in essence, to the Federal Government, that you 
have made sure you have checked with everyone who may have an 
interest or a need for that asset. In addition, there are 
strong public policy concerns associated with the legislation 
that you referred to, McKinney-Vento, that suggest that we need 
to make sure that we are also providing opportunity for the 
homeless to potentially use it.
    However, as you also point out, the number of times that it 
is actually used for that is very low. So I know our past 
discussions have been, how can you create a mechanism by which 
you address the needs and interests and issues associated 
with--the homeless advocacy groups? At the same time, how do 
you move the process forward quickly?
    And I think that is why the legislation is continued, we 
continue to work on it. In the meantime, I think that there is 
an awful lot of work that GSA can do under current authorities 
to move more quickly and more thoughtfully in terms of 
disposing the assets, at least the ones that we have under our 
control.
    So we have been working very closely with agencies to try 
to help them use authorities that we have, such as out-leasing 
or even an exchange authority that we are exploring that would 
allow us to quickly move the asset out and have the agency get 
something back in return. So, for example, we just issued a 
Request for Proposal for interested parties in cooperation with 
NASA to have an out-lease of something called Hangar One on the 
Moffett Federal Airfield that would exchange----
    Chairman Carper. Did you say the Moffett?
    Mr. Tangherlini. Moffett Federal Airfield out in----
    Chairman Carper. Hangar One where I was trained to be a 
Naval flight officer.
    Mr. Tangherlini. Oh.
    Chairman Carper. It is a small world, is it not? Small 
world.
    Mr. Tangherlini. Exactly right.
    Chairman Carper. I go back to Moffett Field to Hangar Two, 
which is we had the Navy P3 world, what we used, the P3 
aircraft, in the Hunt for Red October.
    Mr. Tangherlini. Right.
    Chairman Carper. It was either Hangar Two or Hangar Three. 
They are huge flight hangars that you find all the memories on 
the walls of the squadrons there, which are now empty, of a 
patrol squadron, the Marlin Men. That was my squad. If you 
actually look through there, my name used to appear on that 
wall.
    Mr. Tangherlini. I think the California Air National Guard 
still----
    Chairman Carper. Yes, they were there. They are holding it 
down.
    Mr. Tangherlini. But Hangar One, which is this historic 
property that needed to have some environmental remediation 
that required unskinning it or deskinning it, we have asked to 
see if there is anyone out there who will trade the use and 
occupancy of the airfield in exchange for the historic 
renovation of Hangar One.
    So here we are taking an asset that we cannot afford to do 
the next bit of maintenance on that is not fully utilized, and 
we are asking the private sector if they could partner with us 
to get the historic preservation investment made, and in 
exchange, then, to have access, limited access to the use of 
their airfield.
    Similarly, we suggested in our request for information 
(RFI) for the Federal Bureau of Investigations (FBI) 
headquarters, the idea of partnering with private sector 
entities to explore the possibility of exchanging the existing 
FBI headquarters, which no longer meets the need of the FBI, 
for a new FBI headquarters, or some part of a new FBI 
headquarters nearby, that does actually meet the needs and 
would be more efficient and effective and sustainable in terms 
of both financially and environmentally of managing the 
property for the FBI.
    So we think that we have a number of authorities that if we 
work closely with Congress and we are creative, that maybe we 
can move on the margins more of these properties out, create 
better incentives for the agencies to participate, and at the 
same time, then, give us room to have the conversations we need 
to have between the two branches, the Congress and the 
Administration, to push forward some kind of legislation to 
make our asset disposal process more efficient.
    Chairman Carper. Before I turn it over to Senator Ayotte, 
let me say that if you are confirmed, and I am encouraged that 
you will be, a month after you are confirmed, I just want you 
to come over, sit down with Dr. Coburn and myself, Senator 
Portman and others who are interested in this, and let us just 
figure out what we can do. I appreciate what you are trying to 
do under your own authority, but what we need to do to enhance 
your abilities, to facilitate what you are trying to do.
    I do not want to be here 6 years from now and saying, We 
still have X thousands of unused properties, surplus properties 
that we ought to sell, we ought to get rid of. What are we 
going to do about it? I want it to be for us to have dealt with 
this issue in a smart way. Thank you. Senator Ayotte.

              OPENING STATEMENT OF SENATOR AYOTTE

    Senator Ayotte. Thank you, Mr. Chairman. I want to thank 
you for being here today and for your willingness to serve as 
head of the agency, and thank your family for being here as 
well. I wanted to ask about the recent June IG report, which 
Senator Coburn referenced in his opening statement, that is 
very troubling. Their conclusion that the management improperly 
intervened in the award and extension of multiple award 
schedule (MAS) contracts and resulted in the contracts being 
inflated, pricing, unfavorable contracting terms and 
extensions.
    If you look at it, to have the GSA contracting officers 
tell the Office of Inspector General (OIG) that they feared for 
their jobs because they were trying to do the right thing and 
protect taxpayer interests; yet, companies were able to go 
above their head, either get rid of them to get a more 
favorable contracting officer or put pressure on them to change 
a decision that was in the best interest of the taxpayers.
    This is really troubling in terms of culture. And we want 
the contracting officers, obviously, to feel empowered. We want 
everyone in the GSA to be focused on saving taxpayer dollars. 
So what are you going to do to change this culture? And what 
will you do to hold the people accountable that improperly 
overrode the decisions of the contracting officers so that 
management understands that this is unacceptable within the 
agency?
    Mr. Tangherlini. I appreciate that, Senator. I share your 
concern. In fact, let me just start by saying we have already 
taken some personnel action directly related to an individual 
named in that report. We are going to continue to pursue and 
explore any other action we need to take directly related to 
the evidence or the issues raised in the report.
    But like you, I am more concerned, or I am equally 
concerned, about the broader issues suggested in the report, 
that our contracting officers are not given the control and the 
authority, and frankly, the support by the organization that 
they need.
    So what I have done over the last 14 months to try to 
change the view within the organization about who has the 
authority and how can people relate with each other? I started 
in the first week by sending out a joint letter with our 
Inspector General, Brian Miller, telling everyone within the 
organization, if they see something that they are uncomfortable 
with, they think is wrong, suggestive of waste, fraud and 
abuse, it is imperative that they raise their concern with 
their co-workers, their supervisors, and equally importantly, 
with the Inspector General.
    The Inspector General and I share a common desire to have 
the best, most honest process that we possibly can have for 
running the organization. When this report came out, our new 
head of the Federal Acquisition Service (FAS)--and I have 
appointed in the last couple of months, a new head of the 
Federal Acquisition Service, a person who has not only 
experience in the public sector working in several agencies, 
but also quite substantial experience in the acquisition 
environment in the private sector as well. He sent out a memo 
to his entire staff including the IG report stating that the 
behavior described in this report is unacceptable. He wants 
every contracting officer to feel empowered to raise their 
concerns to him and/or the IG, whoever they feel more 
comfortable with, in the minute they feel any sense of any of 
the kind of behavior that was described in the report.
    I followed Tom's memo to the FAS staff with another memo to 
the entire contracting officer staff of GSA and said, If this 
exists anywhere else in GSA, we want to know about it. We want 
to support you in reporting it. And so, hopefully what we can 
do is begin to build a sense within the entire organization 
that the entire organization has each other's back for getting 
the highest quality outcome, the best results, and the lowest 
cost, because if we want to grow the market share of GSA, if we 
really do want to achieve what we were set up to achieve, then 
people have to just really have trust and faith that they are 
getting the best outcome when they take the GSA route.
    Senator Ayotte. Let me just say, I know you cannot talk 
about personnel actions here, but probably one of the most 
effective things you can do is to hold the people who have done 
this accountable so that other managers in this situation see 
that, If I go down this road, it is going to have a consequence 
to my job. I think that--I appreciate--I know you cannot talk 
about that here, but that will set a culture, along with the 
culture that you are trying to set from the top, so that is 
part of how people are judged.
    And so, I appreciate that. And I think this is a very 
serious issue for the challenges that you face in this 
organization. And with respect to those challenges, I think we 
all know that you have talked about this issue at length, but 
it really struck the American people when they heard about the 
conference, the spending of the $822,000 at the conference to 
celebrate, share, and showcase the diverse professional 
personal talents that obviously sent a shockwave through your 
organization.
    You have testified that last year GSA eliminated 50 
conferences and saved more than $28 million. I commend you for 
that. But the American people are still very suspicious and 
they are feeling that this conference and the abuses we saw 
there with their money really sent a shockwave as to what the 
GSA was doing with taxpayer dollars.
    And so, I wanted to just ask you, the fact that you could 
eliminate 50 conferences and save $28 million, and the fact 
that this hugely egregious conference occurred, what is it that 
was within the organization, the culture, that thought that was 
an appropriate use of spending of money, and how do you see 
yourself changing that culture?
    And I think it goes hand-in-hand with the other issue I 
just asked you of empowering people that their job is to save 
taxpayer dollars, not to find ways to spend them in 
irresponsible ways as that conference was?
    Mr. Tangherlini. I think you described in the question my 
challenge for the last 14 months, almost from the first day I 
was there. I can tell you one of the things that very much 
reassured me that there was hope for us, actually, making a 
substantial difference in the organization; that some of the 
angriest people I have encountered about what took place at 
that conference were GSA employees, people who have committed 
decades of their life and their public service careers to an 
organization that is really built around the idea that if we 
leverage the scale and the scope of the Federal Government, if 
we do it once and we do it well, we can drive down costs and 
push up results.
    What happened there was the exact opposite of everything 
that folks had committed to doing in their public service 
careers. So what we have tried to do is reinforce the core 
principles of what the agency is and is about, and it starts 
with some kind of management 101 stuff. We rewrote the mission 
statement so you actually know what the agency does.
    We want to provide the best value in real estate 
acquisition and technology services to Federal agencies and the 
American people. Before, you did not exactly know what the 
agency was doing, so it is kind of hard to then focus on great 
outcomes.
    We then established six priorities and those priorities, 
chief among them, is to provide the best value, and that means 
get the best price, reduce the long-term costs, find ways to 
help agencies deliver their services more efficiently. And then 
we have done something to try to empower everyone within the 
organization to participate.
    The Great Ideas Hunt, which I referred to in my testimony, 
was leveraging some social media technology we have within GSA 
to ask everyone in GSA, what are their great ideas for reducing 
costs? We got over 600 ideas, but more importantly, we got over 
20,000 comments. People across GSA were engaged in a 
conversation that was not just within their stovepipe, but 
across the enterprise and came up with great ideas, ideas that 
have saved us, just in the last year, over $5 million.
    We want to keep that dialogue going and we really want to 
build a sense of accomplishment that comes from driving down 
the costs and driving up the value, and not some sense of 
accomplishment that comes from a celebration.
    Senator Ayotte. Well, I thank you for what you are doing. 
Your job and this job is very important. You have already taken 
over in very difficult times and are asked to serve, to change 
a culture which is not easy in an organization, but you are the 
taxpayer watchdog.
    Mr. Tangherlini. Right.
    Senator Ayotte. And we are here to support you with that. 
And so, whether it is the Federal property issue or other 
issues that you are trying to address, we want to work with 
you. It is a tough job, but the organization needs strong 
leadership and consistent leadership on this issue so that they 
view their role as the taxpayer watchdog, and I appreciate you 
being here. Thank you.
    Mr. Tangherlini. Thank you, Senator.
    Chairman Carper. I would just say as a follow-on to Senator 
Ayotte's excellent line of questioning. One of the things we 
have tried to do here in this Committee is to provide some 
leadership, just like the kind of leadership that I think Dan 
is trying to provide at GSA, leadership to change the culture 
within the Federal Government. We cannot do it by ourselves. He 
cannot do it by himself. GSA cannot do it by themselves. OMB 
cannot do it by themselves. GAO cannot do it by themselves. All 
the Inspector Generals cannot do it by themselves.
    But if we somehow can figure out how to pull together and 
pull in the same direction, we could have a huge impact. I am 
encouraged with what you are doing at GSA and what else you 
might be able to do if we actually got you confirmed. Although 
we have a bad experience. The only two confirmed 
Administrators, Senator McCaskill will know, in 2 years ended 
up having to step down. So maybe----
    Senator McCaskill. Third time is the charm.
    Mr. Tangherlini. Thank you.
    Chairman Carper. We hope so.
    Mr. Tangherlini. I took a look into that history before I 
got here.
    Chairman Carper. All right. Senator McCaskill.

             OPENING STATEMENT OF SENATOR MCCASKILL

    Senator McCaskill. Thank you. I am not surprised that no 
one has gotten into the weeds on this subject, so bear with me 
while I get into the weeds on one of my favorite subjects. And 
maybe my focus on this will give you more ability to move 
mountains in this regard at GSA.
    In 2009, there were no fewer than five different agencies, 
eight different contractors, and dozens of databases containing 
information that was relevant to good business practices around 
government contracting.
    The Subcommittee that I worked on at the time did some work 
around this issue, these Federal databases and how worthless, 
frankly, they were at getting at the idea that there should be 
a single portal where somebody who is contracting something to 
buy for the Federal Government can get the information 
necessary about problem contractors, about cost, price, scope, 
all of the things that we duplicate over and over and over 
again many different ways, many different times across the 
Federal Government.
    At the time, I expressed great concerns about how well this 
would go, that it was a massive undertaking, and that there 
were all kinds of land mines along the way. This is one of 
those times I hate to say that I was right, but it appears that 
I was in that GAO has now recommended reassessing is the system 
for award management (SAM) and either terminating the SAM 
development entirely, maintaining the current acquisition 
approach, which is not good, or pursuing a whole different 
acquisition strategy for this system for award management.
    I want to ask you about that. In your questionnaire 
response, you said that the Federal Acquisition Service and the 
chief information officer are conducting an in-depth analysis 
of SAM. First, let me ask you, when do you expect that analysis 
to be complete?
    Mr. Tangherlini. I think we will actually have some results 
that we can work through the entire acquisition community this 
summer.
    Senator McCaskill. OK, good. We will anxiously await that 
and hopefully you will share that with us so that we can, 
together, figure out the best way to move this ball. It also 
appears, cost containment, cost growth and resource constraints 
have happened at the same time.
    Mr. Tangherlini. Right.
    Senator McCaskill. So you sought $53 million for SAM, but 
only received $7 million. Right now, the timeline has slipped. 
According to GAO's 2012 report, under the current schedule, the 
final phase we had hoped for early 2014. Now it has slipped to 
2015. As we slip this timeline, it is robbing Peter to pay Paul 
because the underlying legacy systems have to be maintained and 
that is just wasted money down the drain.
    So let me ask you, how realistic do you think the current 
timeline for implementation of SAM is, the 2015 timeline?
    Mr. Tangherlini. Well, and I think that the timeline is 
directly related to those options that we are working closely 
with OMB and the acquisition community to develop. So the 
bigger point really has to be, what lessons did we learn from 
SAM? And I think you were right in both instances. I think you 
were right that we needed to reform the acquisition systems and 
create a new, modern, integrated acquisition environment.
    I think you were also right that it was very challenging 
and it was going to be very hard for us to pull off. We 
demonstrated the latter part, frankly, in our first version 
that came out of SAM last summer. I will say, though, at the 
same time, we have made certain progress because of the 
integration of those systems. We have gone from the number of 
vendors with actual representations and certifications, filed 
representations and certifications from less than a third to 
more than two-thirds.
    So even with the problems we have had with the system, we 
have been able to improve the quality of the data that resides 
in the system. I think we have also learned some incredibly 
valuable lessons within GSA, how we should manage information 
technology development programs, and giving it to our policy 
shop, the Office of Governmentwide Policy was a big mistake.
    Senator McCaskill. Yes.
    Mr. Tangherlini. We have moved it over to be jointly 
managed by the Federal Acquisition Service because this is an 
acquisition system after all. These are the folks who are 
actually going to have to use it.
    Senator McCaskill. And the tech guys.
    Mr. Tangherlini. And the tech guys, right, working with the 
IT folks. So I think what we owe you is a better set of answers 
of how we are going to move forward, how we are going to ensure 
that we are making progress consistently along the way, some 
kind of continual reporting of what that timeline really is.
    And I think we should be realistic about the timeline 
because this is a very complicated area. However, if we can 
really get a handle on creating an integrated acquisition 
environment, I think that is a big key to us figuring out a way 
to reduce the cost of contracting, the amount of duplication 
within contracting, and even helping us get better value and 
lower prices.
    Senator McCaskill. Well, and the oversight.
    Mr. Tangherlini. Exactly, right.
    Senator McCaskill. I mean, the biggest problem--frankly, we 
have been able to enter government contracts without a lot of 
problems. The issue is how well have we monitored those 
contracts for performance and have we gotten value out of those 
contracts. There has been an awful lot of siloed responsibility 
around contracting and contract management, and people who wash 
their hands of it once the ink was dry, and it was not easy 
from that point forward, doing the monitoring that was 
necessary.
    We have seen this across government, not just in the 
Department of Defense, which is the biggest offender, has 
traditionally been the biggest offender, but certainly across 
government. So I really care about this. I would love your time 
at GSA.
    I think the whip cream and cherry on top of the sundae for 
your time at GSA would be for you to leave there with an 
integrated, close to single portal system for contract 
acquisition and management and oversight, and I think it is 
possible, in the next 2 or 3 years, to get that done. We will 
depend on you to come to this Committee for whatever support 
you need.
    I also wanted to briefly bring up with you the GSA IG 
report that happened just a few weeks ago detailing improper 
management intervention resulting in inflated pricing and 
unfavorable terms for certain IT multiple award schedule 
contracts.
    And it cited that there were people who had undermined the 
authority of contracting officers. The IG identified numerous 
instances where the Federal Acquisition Service management 
overrode contracting officer determinations without proper 
justification, pressured contracting officers to extend or 
award contracts, and reassigned contracts to different 
contracting officers, giving the appearance they were not 
getting what they wanted out of one contract office, so they 
were going to move it somewhere else to get what they wanted.
    I would like to know, and if you are not prepared to do it 
today, in writing, what steps you have been taking to hold the 
individuals and management accountable for this obvious 
overstep that was cited by the IG in this recent report.
    Mr. Tangherlini. No, I agree with you. What the IG report 
detailed in terms of activity was completely unacceptable. And 
as I mentioned to Senator Ayotte, we actually took immediate 
personnel action against one person named in that report. We 
also have undertaken a broader top-to-bottom review of 
contracting within the organization.
    I have put my new head of the Federal Acquisition Service, 
Tom Sharpe, in partnership with our new Chief Acquisition 
Officer, Anne Rung, and asked them to go look at the entire 
structure of how we engage in contracting within GSA, top-to-
bottom, to make sure that we have the appropriate oversight, 
that people have the ability to raise concerns, and that we are 
doing what we are expected to do there, because if I am going 
to go to agencies and say, use GSA, they need to be able to 
count on that they are going to get the best and the highest 
quality of contracting activities with the highest integrity.
    Right after the report came out, Tom sent to all his 
contracting officers a copy of the report. Said, Read the 
report. What happened in there was unacceptable. You should not 
be put under the kind of pressure that contracting officer was, 
or at least was suggested in the report. If you have concerns, 
raise it through the supervisory chain to me and/or call the 
IG.
    I then distributed an equivalent note to all contracting 
officers within GSA and said, Just because it happened in FAS 
does not mean it cannot happen to you, too. We want you to know 
that we have your back and you have our support to do the right 
thing on behalf of the taxpayers.
    Senator McCaskill. That is terrific. I also want to 
compliment you for the steps you have taken on Senior Executive 
Service (SES) bonuses. My first encounter with GSA on the bonus 
front was when we were looking into improper contracting 
practices in Kansas City. This was several years ago. And one 
of the supervisors in GSA basically came in front of our 
Committee and, to be most gracious, committed sins of omission. 
I will not say that she was not truthful, although I can 
probably say that, but she certainly committed sins of 
omission.
    Then imagine my surprise when we checked later that she had 
gotten her performance bonus for that year, which clearly was 
misnamed. And when I looked into it, they said, Well, everybody 
gets it. It is just a matter of entitlement. Everyone gets 
these bonuses at GSA. There was no assessment.
    And I know you have taken bold and probably controversial 
and unpopular steps to end bonuses as a right, an entitlement, 
and turned them into something that they would be in the 
private sector, and that is only acknowledgment for work well 
done, and certainly not in this sequester environment.
    So I know that you have, I think, the figure is 85 percent 
that you have diminished the bonus-giving at GSA, and I just 
want to compliment you for swimming upstream on that, because I 
know it probably does not make you the most popular guy around 
where you work. And I just want to make sure that--you are 
going to come in front of this Committee and we are going to 
holler at you a lot--I want to make sure that we also tell you 
that we know that some of the work you are doing is hard to do, 
but you are changing a culture and we appreciate it very much.
    Mr. Tangherlini. Thank you, Senator.
    Senator McCaskill. Thank you, Mr. Chairman.
    Chairman Carper. Let me just followup on something that 
Senator McCaskill said. We talked about the IG report. You 
raised it, Senator Ayotte raised it as well. And the Senator 
asked a question, the word ``pressure'' was used.
    Mr. Tangherlini. Right.
    Chairman Carper. Pressure on contracting officers, pressure 
brought by management in some cases. Senator McCaskill did the 
same thing. You have mentioned it. Pressure from whom?
    Mr. Tangherlini. In this instance, there was a sense that 
there was pressure from the vendor, theoretical pressure 
potentially from Congress.
    Chairman Carper. Let us talk about that.
    Mr. Tangherlini. OK.
    Chairman Carper. Let us talk about it. Sometimes people in 
our jobs are looking out for our constituents, our companies in 
our States are not disinclined to go to bat for them. And 
sometimes it can be appropriate, sometimes it is not. Can you 
just talk a little bit more about what might be appropriate or 
not? Because it sounds like here, what we are doing, we are 
just saying, are pressures being brought in part by people who 
do the job, the jobs that we have, and they walk away from 
this?
    In other cases, the contracting officers and the managers 
get, in some cases, disciplined or they lose their job. I want 
to make sure that, to the extent that our colleagues, whether 
in the House or the Senate, are doing things that are 
inappropriate. We know about that as well.
    Mr. Tangherlini. Well, I think what was really 
inappropriate was the suggestion that there was this pressure 
coming from the Congress that would then suggest that we would 
take an action that was not in the best interest of the 
American people, because we have a fiduciary responsibility, 
Congress has a fiduciary responsibility under the Constitution, 
essentially the ultimate one.
    So what I have told my folks is, we have an Office of 
Congressional Affairs. That is where the correspondence should 
be managed, that is how it should be handled, that is how it 
should be tracked so that we can make sure that we followup 
with Congress immediately, we address issues, but that we do 
not allow there to be kind of some sub-hierarchal or 
organizational nebulous, undefined pressure that is being 
applied to get some outcome.
    We need to be able to explain, justify, support, and defend 
any outcome, because what I have said is the standard is the 
one that I am operating under right here, and that is the 
standard of being able to explain it under oath in a 
congressional committee.
    And so, what we want to do is make sure that our people at 
the front lines know that yes, they have a responsibility to 
make sure we can provide information, respond to Congress, but 
that we do have formal processes for doing that. So that we do 
not have what feels like undue pressure decisions.
    Now, I think the real pressure was, as described in the IG 
report, from the supervisor to the contracting officer. Both of 
those folks know what their job is and that supervisor should 
recognize that their job is not to pressure the contracting 
officer to do something that they do not think is in the best 
interest of the American people.
    Chairman Carper. I am going to yield back to Senator 
McCaskill. Let me just mention this. I think it is appropriate 
for a Member of Congress to go to bat for a constituent firm 
who is able to provide a better service at a better price than 
maybe another option. I do not see anything wrong with that.
    But the idea that somebody, a Member of Congress going to 
bat on behalf of a constituent who provides a good or a service 
that is not more cost effective, that is another kettle of 
fish. Senator McCaskill.
    Senator McCaskill. Well, I was just going to say, maybe 
this is something we ought to talk about, Mr. Chairman, but it 
seems to me that sunshine solves a whole lot of problems. Maybe 
we should talk about it. Maybe this is something you would not 
want to do unilaterally, which I would understand, but maybe we 
should talk about a requirement that any letters from Congress 
advocating on behalf of certain vendors, that they immediately 
be posted on a public website and that calls be logged and 
posted on a public website.
    It takes a lot of nerve, frankly. I do not disagree with 
the Chairman's characterization. It is one thing to write a 
letter saying, This company exists, this company, I believe, 
does good work, give them every lawful consideration with 
obviously best price being determinative. I mean, that is one 
thing.
    It is another thing to make phone calls and say, Hey, did 
you know I am on your appropriations committee and, or write 
the kind of letter that would make people believe that there 
was going to be a negative consequence of not doing what this 
Congress person, woman or man, House or Senator, would do.
    So, I assume every letter I have written is going to be on 
the front page of the paper. And so, our letters that we have 
ever written are carefully crafted so that we would never give 
anyone the impression that we were trying to influence how 
something was going to turn out.
    Maybe that is something we ought to talk about, because, it 
would not surprise me if some of the people writing 
inappropriate letters and making the inappropriate phone calls 
are the same ones having press conferences about the conference 
in Las Vegas. That would not be a shock to me.
    Chairman Carper. Nor to me. All right. I want to followup 
and talk about a first cousin to some of the contracting issues 
Senator McCaskill was raising, and she has been like a dog with 
a bone on this issue and we have been happy to be there to urge 
her on and to support her with this. But I want to talk a 
little bit about strategic sourcing.
    Mr. Tangherlini. Right.
    Chairman Carper. There is, as you know, widespread 
agreement among procurement experts that the Federal Government 
could save a ton of money through strategic sourcing, which is 
really a fancy way of saying that the government should do a 
better job of buying in bulk. You also have expressed strong 
support for this concept.
    GAO has done two reports for this Committee over the last 
year on strategic sourcing. I think the report last fall showed 
that leading companies in the private sector manage about 90 
percent of their spread through strategic sourcing. But the 
agencies that GAO reviewed, Federal agencies that GAO reviewed, 
managed only about 5 percent through strategic sourcing.
    In the report released, I think this April, GAO estimated 
that in Fiscal Year 2012, the Federal Government could have 
saved about $12 billion dollars--had it followed the strategic 
sourcing practices of several large companies that GAO 
examined.
    I realize that major companies, they do not buy the same 
stuff that the Federal Government buys. They are not buying 
submarines.
    Mr. Tangherlini. Right.
    Chairman Carper. They are not buying advanced radar 
systems, they are not buying F-35 fighters, so they buy 
different kinds of things. But there is a fair amount of 
overlap here, there is a fair amount of overlap, and we can 
certainly learn from what they are doing in many instances. But 
what specific steps do you have planned to increase the 
opportunities for agencies to participate in strategic 
sourcing, please?
    Mr. Tangherlini. I appreciate the question. And actually we 
went out and talked to a number of large companies to ask them, 
How do you handle acquisitions? And what we found over and over 
is the large high-quality companies are really focused on 
trying to leverage their scale and scope and try to buy it once 
in a while. They really are trying to find strategic sourcing 
opportunities.
    In one particular case, a company we visited in Silicon 
Valley, their equivalent to GSA was doing 90 percent of the 
buying of the organization, and since they were so focused on 
doing so much of the sourcing for the organization, they were 
able to change the nature of the discussion they had every year 
with their sub-components from, How much are you going to buy 
next year, to, How much do you need to save next year?
    And I think that if we can find ways that we can begin to 
leverage the scale of the organization and build stronger 
relationships with our vendors, give some visibility into what 
we are buying, when we are buying it, how much we have paid and 
are willing to pay, I think that we have the ability to drive 
down prices while also pushing up value and reducing the cost, 
actually, of making the acquisition.
    We think since 2010, and working closely in partnership 
with OMB and other agencies, we have saved over $300 million in 
strategic sourcing across the Federal Government. But as you 
pointed out, we think that is just the tip of the iceberg.
    We have five new strategic sourcing initiatives we are 
entering into this year. We just announced the wireless 
strategic sourcing contract. Now, the ironic thing about this 
is the Tangherlini family has done a better job buying our 
wireless service than the Federal Government has. We have one 
plan and one price. We share minutes.
    Chairman Carper. And that includes your wife?
    Mr. Tangherlini. Yes, it does.
    Chairman Carper. And it includes your two daughters?
    Mr. Tangherlini. Yes.
    Chairman Carper. And yourself?
    Mr. Tangherlini. Cassie, at one point, got expensive but we 
resolved that. But the Federal Government, though----
    Chairman Carper. You changed the culture a little bit in 
your family.
    Mr. Tangherlini. Well, we tweaked the plan. But the Federal 
Government had over 4,000 contracts, that we know of, and over 
800 different plans. So what we have been able to do is 
coalesce around one contract, one plan that can be shared 
across agencies and drive down the cost. The Gartner Group, 
which assesses the performance of IT organizations, thinks that 
we can cut between a third and a half of our price by 
coalescing around strategic sourcing.
    So we want to bring good, common sense, business-like 
solutions to agencies, demonstrate the savings to them, and 
then sign them up. We want to come up with new ways, new ideas. 
We are pursuing a janitorial and sanitation supply strategic 
sourcing initiative. So the things you buy associated with 
cleaning products and toilet paper, that kind of stuff where 
you can really get the benefit of volume, we should go in and 
buy that at volume with the Federal Government.
    At the same time, we need to be very attentive to small 
business and make sure we protect the ability for small 
businesses to compete. In our office supply contract, we were 
able to drive down prices as much as 13 percent across the 
market basket, but we have also been able to expand small 
business participation in office supplies from about 65 percent 
to more than 75 percent.
    Why? Because the small businesses are able to move more 
quickly, they are able to compete more aggressively, they have 
lower overhead, they are closer to the end users. So we are 
actually able to leverage small businesses through strategic 
sourcing to not only expand opportunity, but drive down costs. 
That is a win-win and we need to figure out ways that we can 
pursue that more aggressively across the entire acquisition 
landscape.
    Chairman Carper. Good. Well, those are some encouraging 
words. I am going to continue to followup on this just a little 
bit. But when you look at agencies that are not anxious to--
Senator McCaskill, thanks for all your good work here. But when 
you look at the agencies that are not buying goods and services 
through the Federal strategic sourcing initiatives, what are 
some of the main obstacles to their actually doing that?
    Mr. Tangherlini. Well, it is a great question. I think a 
lot of it is just understanding that those vehicles are 
available, understanding what the value proposition is. That is 
why Joe Jordan, the Administrator of the Office of Federal 
Procurement Policy, chairs a strategic sourcing leadership 
council, brings together acquisition professionals across all 
the agencies, as well as GSA.
    We have tried to divide up the water front of what we are 
going to pursue in terms of strategic source initiatives. And 
we try then to use that as an opportunity to share best 
practices and market the solutions across the agencies.
    So I think it is my job to be, in part, the educator and 
sales person in G-funds strategic sourcing. I have been going 
from agency to agency talking with secretaries or deputy 
secretaries, trying to give them some ways that we think we can 
help them save money, and among them is their percentage of 
participation in existing strategic sourced vehicles such as 
office supplies.
    Where that percentage is low, we show them and encourage 
them to push it up. What I think is what is measured is 
managed, and so by bringing that data to agencies, that can 
create some leadership pressure to actually make people move on 
it.
    Chairman Carper. Well, every Cabinet Secretary has a 
problem with trying to comply with sequestration----
    Mr. Tangherlini. Right.
    Chairman Carper [continuing]. Looking for ways to save 
money, and bingo, you have a solution to help them.
    Mr. Tangherlini. Right.
    Chairman Carper. So this is a great opportunity. I 
mentioned Einstein earlier. In adversity lies opportunity. 
There is plenty of adversity through sequestration, but as it 
turns out, there is some opportunity as well.
    Let me see if--there may be another question or two here. 
Sort of another question on acquisition, and I am told that 
about 10 percent of all Federal spending on contracts--that is 
about $50 billion--goes through GSA. One reason that we see so 
much duplication in contracts across the government is that 
agencies do not have good data on the prices that they can get 
under governmentwide contracts such as GSA contracts.
    We hear that having better priced data would enable 
agencies to demand the lowest price possible. Just tell me 
again, you have spoken to this in part, but what steps, further 
steps, is GSA planning to take to help agencies just get access 
to the pricing data?
    Mr. Tangherlini. So we are working very closely with OMB to 
develop something called the Prices Paid Portal that will allow 
agencies to input the prices that they have paid for various 
items into a common and shared environment that other agency 
contracting officials can see to test whether they are getting 
a good price or not.
    The other thing we are doing is bringing to agencies' 
attention the cost associated, in terms of time, effort, 
energy; and therefore, resources in not using, as a jumping off 
point, the already competed GSA schedules. So within the GSA 
schedule environment, you are able to take vendors that are on 
the schedule and compete them against each other for your 
particular need.
    By jumping to that step, using agency acquisition timeline 
data, we think we can save between a third and a half of the 
time that contracting officers have to put into going and 
getting an open market outcome. We think that time can then be 
used at getting better prices or doing better contract 
administration or just, frankly, reducing the cost of 
acquisition across government.
    So what we are trying to do is get around to the agencies, 
as I go from meeting to meeting, and demonstrate for them the 
value they are leaving on the table by starting from scratch. 
When we do get the agencies kind of coalescing around common 
vehicles such as the office supply strategic source initiative, 
we get a wealth of data that we are then able to use to 
negotiate even better deals with the vendors.
    And so, I think there is a virtuous cycle we can start 
here, but the trick will be getting the systems by which we can 
share that information and just doing a better job of getting 
out there and teaching the agencies what they are leaving on 
the table in terms of cost and price.
    Chairman Carper. All right. Good. And the last thing I want 
to do is just to go back to the issue of real property and 
space that we occupy. I mentioned the Nuclear Regulatory 
Commission, a new building that is being built. I think they 
are going to lease it for a multi-year period of time.
    Mr. Tangherlini. Right.
    Chairman Carper. And the cheapest of the three buildings is 
the one that they own.
    Mr. Tangherlini. Right.
    Chairman Carper. I mentioned earlier that we have mis-
aligned the incentives for agencies. If they enter into a long-
term lease, the Congressional Budget Office (CBO) scores every 
year on that agency's budget however much the lease costs. If, 
however, they buy something, and it may be the same building, 
they buy it for a particular cost, and it might be cheaper, way 
cheaper, over time, but CBO scores it so that we have to 
allocate the money for that agency in the first year.
    Mr. Tangherlini. Right.
    Chairman Carper. How do we change that? Do we need to pass 
a law? How do we change that so that CBO--what we are doing is 
just so cost ineffective.
    Mr. Tangherlini. It gets to a number of issues, as we have 
discussed, with the way the Federal Buildings Fund is 
structured and the way the scoring rules interact with it. The 
structure of the fund is pretty sound. The idea is you charge 
market-based rents for use and occupancy of Federal space, and 
we then also fund the market-based rents that we pay from 
facilities that we lease. So agencies pay roughly the same 
amount based on market analysis for occupying other leased or 
owned property.
    The problem happens on the other side when it comes time to 
start paying for things. On the leases, we pay the leases 
directly because it is a contract. On the buildings that we 
own, that money is reflected as revenue to the Appropriations 
Committee and is either spent to the buildings or counts as 
credit to the Appropriations Committee for other expenditures.
    So for the last 3 years, that money has been used to pay 
for things outside of maintaining our Federal assets. This year 
in the President's budget, Fiscal Year budget, he has proposed 
full funding, so when all the rent money comes in, it either 
goes to pay lease rent or it goes to maintain, operate, and 
improve our buildings.
    But then we get to this issue if we do want to go and buy a 
building so we can replace a long-term lease commitment, which 
we would pay as an operating expense every year, we have to 
have the full up-front cost of that building in the first year, 
which makes it very hard to then go and buy or build buildings.
    I think what we have to do is really explore the way the 
scoring conventions work. I think we have to work with CBO and 
OMB and try to understand what the first principles are, what 
we are trying to protect in terms of the flexibility of the 
President and the Congress to make spending decisions, but also 
take a good hard look at long-term costs so that we know what 
impact we are having in later budget years, as well as make 
sure that we are reinvesting in our assets so that we are not 
pushing subsequent investments off on other generations for 
them to pay for.
    Chairman Carper. All right. Thank you. One last question. 
If confirmed, what policies would you implement to assist 
agencies in assessing utilization levels and identifying 
opportunities to save on leasing costs by consolidating office 
space?
    Mr. Tangherlini. Well, already we are working very closely 
with OMB and interested agency partners to try to help them 
understand what their portfolio space looks like, what the 
opportunities for savings are. We think the immediate 
opportunities happen with every lease expiration for agencies 
to begin to reconsider what their space needs are.
    But I have been challenging the staff of the Public 
Building Service to look at lease expirations that are not 
happening in the next year, but look at them happening in the 
next 5 or 7 years, begin to challenge the agencies what their 
actual space needs are, and see if we can begin to build some 
intermediate term plan that will allow us to substantially 
reduce our footprint.
    Because as we have demonstrated in our own headquarters 
building, you can get nearly twice as many people into a 
standard Federal office building by implementing more modern 
mobile office approaches. So reducing the number of single 
occupancy, individual offices, using more collaborative space.
    We are using ``hoteling,'' which means that 80 percent of 
the people within the building do not even have an assigned 
desk. They book one in advance. They make a reservation. And we 
have substantially reduced the footprint. We are down to about 
140 square feet per person, but because the space is open and 
wide and light, it does not feel like you are in a tiny, little 
space.
    Chairman Carper. Good. All right. We gave you the 
opportunity to give an opening statement and you have been good 
to respond to our questions. We will want to followup. There 
are going to be some questions in writing, as you know. 
Anything you want to say, just kind of sum up here as we 
prepare to wrap it up?
    Mr. Tangherlini. Well, I can say that I really appreciate 
the opportunity to come before you today. I appreciate the 
opportunity to sit before this Committee in nomination for this 
important job. I particularly appreciate the tremendous support 
I have gotten from the women and men in GSA over the last 14 
months, helping us make possible some of the improvements that 
I was able to present to you today that are suggestive of the 
kind of work we can do to make GSA a fantastic agency, an even 
better agency than it already is, and use it to support Federal 
agencies in driving down their costs of delivering their 
incredibly important services to the American people. So thank 
you very much.
    Chairman Carper. You are quite welcome. I want to close 
with some thank you's as well, to Cassandra, who I understand 
is 15, older sister to, who is it, Francesca, age 13. The work 
that your dad is doing, the leadership he is providing, is one 
of many things that we need. It is a very important thing, but 
we need to do it in this country to make sure we do not 
shoulder you and your sister and your friend with an enormous 
burden of debt, to carry for the rest of your life.
    We have to figure out how to get better results for less 
money, and that is a big part of what your dad will do if 
confirmed to lead the General Services Administration. And I 
want to say especially to your mom for your willingness to 
share with us this man. You have been sharing him for quite a 
while in a variety of capacities, but we probably do not say 
thank you enough, but I want to say thank you.
    And I would say to your dad, the young 89-year-old 
marathoner sitting right behind you, that--I run half 
marathons. I do not run marathons, I run half marathons. I used 
to say Delaware is too small for a marathon. But actually we 
now have a marathon, so I cannot say that anymore.
    But I usually say, I just do not want to lose to the 8-
year-old kids. I do not want to have any 8-year-old kids beat 
me across the finish line in a half marathon. And now I am 
going to have to think about those 89-year-old men. I do not 
want to lose to anybody as young as 8 years old or 89. But you 
obviously are doing something right in your life, and you 
obviously did something right in raising this guy. So we thank 
you for that, too.
    And to Theresa's parents, I think you all work a little 
around here somewhere, do you not, in Maryland? Not too far 
away. We are happy that you are here and able to join us as 
well.
    Now, I am told by Trina over here in the corner that the 
hearing record will remain open until noon tomorrow--that is 
June 19--until 12 p.m. for the submission of statements and 
questions for the record. We would ask our colleagues to try to 
meet that deadline. I know it is a short deadline, but we ask 
them to try to meet that. And if you do have questions, we 
would ask that you just respond to them very promptly and we 
will see how quickly we can try to move this nomination along.
    With that having been said, we thank you and this hearing 
is adjourned.
    [Whereupon, at 11:49 a.m., the hearing was adjourned.]

                            A P P E N D I X

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